6/03/2020 Risk Management for SME’s David Martin Mark Van der Haar Directors – AB Phillips 1 Risk Management for SME’s David Martin Mark Van der Haar Directors – AB Phillips 2 1
6/03/2020 Agenda • Change • Risk Management • Insurance – One part of the puzzle • History & How it works • Trends • Key Insurances 3 Change Globalisation Technology Population Social Environmental Geographic 4 2
6/03/2020 Risk Management • What is Risk? Anything that may have the potential to harm the health or safety of a person, the business assets or its ability to continue. • Who is responsible for Risk Management? The employer or organisation is responsible to provide a safe working environment and take reasonable care to identify hazards to both people and the business, and introduce effective measures to mitigate or control the risk. 5 Risk Management Systemic Approach Analyse Review RISK Management Identify Monitor Designed to be; • Action Living process • Minimise losses • Maximise opportunities 6 3
6/03/2020 Eliminating or Controlling Risk Build Strategies - Tfer to other parties by; - Contract Action - Insurance - Implement Procedures ie: - Administrative - Engineering - Maintenance - Security 7 How does this affect insurance? Transfer of risk to Insurance is extremely common strategy for mitigation or elimination of risk Underwriters are taking a lead and an attentive role in Risk Management • Well managed organisations do not have the same exposures • Orgs with strong risk management plans have; • less claims • less expensive claims • More likelihood of recovery after an event • More likelihood of growth and success 8 4
6/03/2020 History Insurance 1686 - Edward Lloyds Coffee shop Syndicates Merchants Corporate “Names” Financiers Corporate body governed by the LLoyds LLoyds Investors Sailors Re- Lloyd's Act 1871 insurers Wholesale Brokers Ship Brokers Owners Insurance & Re-insurance Market £53.5 billion of syndicate-level assets 9 Global Insurance Market Markets are becoming much more contested Growth – Developing World Centric 10 5
6/03/2020 Insurance Trends • Working with Businesses to reduce claims and improve profitability • Growth into emerging markets • Developing new products • Integrating existing external providers to minimise costs • Short term premium increases due to supply demand 11 Insurance - Types 12 6
6/03/2020 General Business Insurances Under Valuation - Co Insurance Clause Public liability General property Fire & peril damage Business Pack Electronic equipment Theft breakdown Business interruption 13 Professional Indemnity (PI) the conduct of the insured’s Claims professional service causing a arising from client to suffer a ‘real’ financial loss – Errors & Omissions (E&O) • All related entities • Directors, execs and employees Coverage (past, present & future) • Claims made (as opposed to occurrence based) 14 7
6/03/2020 Management Liability (ML) • Directors & Officers • Employment Practices • Statutory Liability • Crime / Fraud Designed as • Kidnap, Ransom & Extortion protection for SME • Cyber* businesses and their directors. EPL claims can be heavily reduced through utilisation of PMA solutions 15 Cyber Crime 16 8
6/03/2020 Cyber Crime Insurance Feature Benefit Business Interruption Coverage for a drop in revenue 3rd Party Liability & Multimedia Judgements, settlements, civil penalties etc as a injury direct result of a multimedia injury to a third party • Response Costs Restoring data • mitigating further damage • Notification costs • Credit and Identity monitoring • Legal and forensic costs • IT consultant Costs • Extortion costs • Business Interruption External Supplier suffers cyber event • Cyber Theft Stolen funds 17 Insurance free solution Ensure software licences Outdated software exposes businesses to potential up to date and AV attacks, triggers loss of clients’ personal information, leading to brand damage and rectification costs. updates enabled Regularly review Review and ensure sensitive information, such as information stored payment data or confidential trade secrets, is secure. internally SMEs need to know how to sustain operations even if Advise SMEs to plan data access is disrupted and act quickly to prevent ahead. distressed customers or lost revenue after an attack. The most successful companies at preventing cyber Do they involve all the losses lead from the top and educate their workforce? employees. 18 9
6/03/2020 Business Interruption “Business interruption insurance deals with the continuity of income after property is damaged or lost after a catastrophic event” Covers; • Loss of Income* • Additional cost of working * total lost Income = lost revenue + costs incurred in reducing your loss - expenses normally incurred 19 Worker’s Compensation • Administered at a State Level • Responsible for: • Education • Licensing and Registration • Insurance • Work Place inspections • Prosecutions • Claims & Return to work • Claim costs impact your Premium for 3 years 20 10
6/03/2020 Work-Related Mental Health Employers are now, under OH&S, responsible to ensure employees are not facing adverse conditions which have a negative impact on their mental health – Work Related stress. Key Statistics: • 7,200 plaintiffs compensated (6% of all WC claims) • Time off work was 15.3 weeks compared to 5.5 weeks average • compensation was $24,500 compared to $9,000 for all claims 21 Sources of WR Stress Claims At Risk Occupations Sources of Claims • Train and tram drivers (10.3 claims per million hours) • police (6.6 claims per million hours) • Indigenous health workers (6.0 claims per million hours) • prison officers (4.0 claims per million hours) • ambulance officers and paramedics (4.0 claims per million hours) 22 11
6/03/2020 What’s on your mind Consider where you or your clients are most exposed / least prepared 23 24 12
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